The purpose of CCL is to encourage energy efficiency, which means most businesses pay it unless an exemption or reduction applies. From 1 April 2026, the main rates increase in line with inflation, so understanding the new figures and available reliefs can help you budget accurately and avoid overpaying.
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- What CCL is: A government environmental tax applied to non‑domestic electricity, gas, LPG, and other taxable fuels to encourage businesses to reduce energy use. It is charged per unit of energy and added by your supplier as a separate line on your bill.
- Who pays: Most UK businesses. Domestic consumers, charities for non‑business use, and very low usage supplies are excluded.
- Key 2026 rate changes: From 1 April 2026, electricity and gas rise to 0.801p per kWh, solid fuel rates increase with RPI, and LPG remains frozen at 2.175p per kg.
- Main exemptions: Domestic energy, qualifying charitable non business use, small supplies below the de minimis legal threshold, non-fuel uses, and specific technologies such as good quality combined heat and power.
- CCA discounts: With a Climate Change Agreement, reductions are 92% for electricity, 89% for gas, 77% for LPG, and 89% for other taxable fuels.
What the CCL is
The Climate Change Levy is an environmental tax on supplies of taxable commodities to non‑domestic users across the UK. Suppliers apply it automatically and then account to HMRC. HMRC publishes the rates and rules, and uprates the main rates annually.
Who Pays and Who Is Exempt
Who Is Liable
CCL applies to most commercial, industrial, agricultural, and public sector energy use.
Exclusions and Exemptions
Domestic use and the non‑business use of charities are excluded from main rates.
Small or low‑usage supplies can be treated as domestic and excluded, using HMRC’s de minimis thresholds. Current thresholds are broadly 33 kWh per day or less for electricity and 145 kWh per day or less for gas in the billing period.
Other exemptions cover non‑fuel use, certain transport uses, onward supply for resale, and specific generation uses.
Quick Checks
If your site is domestic or a charity’s non‑business activity, CCL should not be charged.
If your consumption is very low, check if the de minimis rule applies on your account.
Main CCL Rates
Supplies that fall within the de minimis thresholds are treated as domestic, so no CCL is charged. Once a supply goes above the threshold, it no longer qualifies as low usage, which means CCL applies to the entire consumption, not just the units above the limit. For example, if a site uses 16,000 kWh of electricity a year, CCL is charged on all 16,000 kWh.
2026 Main Rates, Effective 1 April 2026
| Commodity | Unit | Rate from 1 April 2026 |
|---|---|---|
| Electricity | £ per kWh | 0.00801 |
| Gas | £ per kWh | 0.00801 |
| LPG | £ per kWh | 0.02175 |
| Any other taxable commodity | £ per kWh | 0.06264 |
For Comparison, 2025 Rates (1 April 2025 to 31 March 2026)
| Commodity | Unit | Rate from 1 April 2025 |
|---|---|---|
| Electricity | £ per kWh | 0.00775 |
| Gas | £ per kWh | 0.00775 |
| LPG | £ per kWh | 0.02175 |
| Any other taxable commodity | £ per kWh | 0.06064 |
Why Rates Change
Rates increase most years in line with the Retail Prices Index to maintain the incentive to use energy efficiently. LPG has been held at a frozen main rate.
How Charges Appear on Bills
Suppliers list CCL as a separate line on your electricity or gas invoice. For supplies charged at the standard VAT rate, VAT is also applied to the CCL amount. Supplies at the reduced VAT rate do not attract CCL.
Reduced Rates Through Climate Change Agreements (CCAs)
What a CCA Is
A voluntary agreement for energy‑intensive sectors. In return for meeting efficiency or emissions targets, participants receive large percentage reductions on CCL.
Discounts in 2026
- Electricity: 92%
- Gas: 89%
- LPG: 77%
- Other taxable fuels: 89%
Key 2026 Scheme Dates
The government has confirmed a new six‑year CCA phase with targets running 2026 to 2030 and reduced‑rate certification available until March 2033. Statutory guidance for the new phase was published in February 2026.
Joining or Rejoining
New entrant windows and sector‑level processes are administered via the Environment Agency and sector associations. If you have not yet applied for the 2026 phase, consult the statutory guidance and your sector’s CCA administrator for the latest dates and requirements.
How CCL Affects Your Bills
Interaction with Unit Rates, Standing Charges, and VAT
CCL is charged per unit of energy and sits alongside your unit rates and standing charges. For standard‑rated supplies, VAT is applied to the total, which includes any CCL charged. For reduced‑rate supplies, CCL does not apply.
When CCL Can Be Reclaimed
If you were charged CCL in error or at the wrong rate, suppliers should issue credit notes and correct their returns. Where you have under‑claimed relief after providing PP11 certificates, you can submit HMRC form CCL200X to claim a tax credit.
Common Signs You May Be Overpaying
- Your bill shows CCL despite domestic classification, charity non‑business use, or very low consumption.
- Your CCL rate does not match the current published rates.
- Your PP10 or PP11 documents from HMRC have not been provided to the supplier, have expired, or were not transferred when you switched supplier.
When to Review Your CCL Charges
- Moving premises or changing site use
- Switching supplier or contract, to ensure PP11 certificates are up to date
- Operational or equipment changes, such as installing CHP or changing production processes
- Changes to CCA eligibility or sector guidance
How to Check Your CCL Is Correct
Step 1. Find CCL on Your Bill
Locate the separate CCL line for each commodity.
Step 2. Confirm the Rate
Compare the rate on the invoice with the current HMRC rates for the relevant period and commodity.
Step 3. Check VAT and De Minimis
If your supply is at the reduced VAT rate or below the de minimis threshold, CCL should not be charged.
Step 4. Review Relief Certificates
If you claim reliefs or CCA discounts, make sure PP10 has been submitted to HMRC and PP11 to your supplier, both within the five‑year validity window, and re‑issued if you switch supplier.
Step 5. Ask for Support
If there is an error, suppliers can issue credit notes and adjust their returns. Where you have under‑claimed relief, HMRC form CCL200X is available to claim a tax credit.
If your supply is on a business tariff or is not treated as domestic for VAT, CCL can still apply. Very low‑usage supplies may qualify as domestic under de minimis thresholds, which would remove CCL. Check the VAT status on your bill and compare consumption with the de minimis levels.
No. CCL is a tax with nationally published rates. It should appear as a separate line regardless of supplier. If you have reliefs, submit a new PP11 to the new supplier so the discount continues.
Energy for a charity’s non‑business use is excluded from main rates. Business activities of a charity may still attract CCL. If at least 60 percent of a premises’ use is domestic or non‑business charity use, the whole supply can be treated as such for CCL. Consult HMRC’s CCL1/3 for the detailed rules.
CCL applies only to listed taxable commodities. LPG’s main rate is frozen at 2.175 pence per kilogram, while electricity and gas are uprated with inflation. Some non‑fuel uses and specific generation cases are exempted under HMRC rules.
Yes. Suppliers can issue credit notes and correct their CCL returns. If you under‑claimed relief after submitting PP11, you can apply for a tax credit using HMRC form CCL200X. Keep invoices and certificates as evidence.
Where VAT is charged at the standard rate, CCL is added and then VAT applies to the total. Where the reduced VAT rate applies, CCL is not charged. Check your VAT rate and ensure relief certificates are in place if you qualify.
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